The environment surrounding a settlement is a critical foundation for the development of human society and culture. Using integrated approach of geospatial technology and theoretical analysis of human settlement patterns and living environments, this contribution establishes a development concept of arid regions on the bases of organizational theories and sustainable development framework, and also proposes a total suitability index of human settlement environment (SUiHSE) by augmenting the contributing factors to the environment. The concept and the index were then adopted to evaluate the suitability of human settlement environment in the Tarim Basin. The study spatially quantified the natural environmental factors that control or modulate socioeconomic development in the arid areas and then calculated the total suitability index of human settlement environment (SUiHSE) for each of the spatial grids considered. The results show that the best suitable area for human settlement and socioeconomic development is only 3.1% of the total area, the generally suitable area is 7.2%, and the marginally suitable area is 8.4%. The generally unsuitable and extremely unsuitable categories account for 81.2% of the total area.